USD declines on uncertainty, jobs reports

Story link: USD declines on uncertainty, jobs reports

The US dollar declined versus the euro, the pound and the yen after the US election results as investors remained unsure about how President-elect Barack Obama will approach the financial crisis and amid speculation about who Mr. Obama will select as his Treasury Secretary.

The greenback was also hurt by a private report showing that employers in the private sector cut 157,000 jobs in October and by a separate report that said job layoffs last month were 79 percent higher than in October 2007.

The official Labor Department report on jobs, due Friday, is expected to show that 200,000 jobs were lost in October and that the unemployment rate went from 6.1 percent in September to 6.3 percent in October.

Another factor in the dollar’s retreat was release of the Institute for Supply Management’s non-manufacturing index, which dropped to 44.4 in October, a reading showing that the service sector remains in contraction.

Meanwhile, the pound was up not only versus the greenback but also against the euro on speculation that the Bank of England will cut interest rates by 75 basis points when its Monetary Policy Committee meets on Thursday.

The gains for the pound came after early declines spurred by the announcement by the Chartered Institute of Purchasing and Supply that its services index dropped to 42.4 in October from 46 in September, showing that the UK services sector, like the US sector, is still contracting.

At just about noon in New York, the pound traded at 80.52p to the euro and it took $1.6156 to buy a pound, while the dollar traded at $1.3009 to the euro and it took ¥98.955 to buy a dollar.